We Support Expanding Overseas Production by Japanese Companies in Central and Eastern Europe

February 2010

Issues Faced by Japanese Companies Expanding into Central Europe

More and more Japanese companies have entered Central Europe since the middle of the 1990s, with a view to advancing into the European market. At the beginning, advancement into Hungary attracted much attention, while some companies later launched into the Czech Republic, Poland, and Slovakia. Currently, approx. 200 Japanese companies have business arms in these four Central European countries.

One of the issues faced by such Japanese companies is the improvement of production efficiency. Even companies that have established some of the most effective production systems in Japan face with great difficulties in getting similar systems to work in other countries due to the differences of languages and cultures.

In light of this situation, in 2000, Sumitomo launched its new logistics services to provide know-how and human resources that can function as part of the production process of our customers. We are now comprehensively supporting overseas production by Japanese companies in transportation and distribution, by offering these new services in addition to our traditional transportation services that cover land, sea, and air transportation—our original global logistics business.

Townscape of Pilsen with factories. This is the fourth largest city in the Czech Republic. "Pilsener," a beer brewing method, comes from the name of this city.

Special Team Organized in the Czech Republic

Through our logistics services, we help our customers manage parts and materials, and offer advice aiming at overall optimization, while reviewing production processes from the three perspectives of "human resources"("Hito"), "information"("Joho"), and "materials"("Mono"). We also propose improvement measures for realizing efficient systems that eliminate wastefulness in production.

As these services have produced increasing achievements, we planned to organize a special team to support advancement by Japanese companies into Central and Eastern Europe. In 2006, a branch of Sumisho Global Logistics Europe was opened in the Czech Republic, engaging in wide-ranging logistical functions. Staff members who have both knowledge and practical experience in logistics were assembled from various fields, so that accumulated skills and know-how could be concentrated in the branch.

Staff members of the Czech branch of SGL Europe. About 100 people, including partners, are in charge of the management of the warehouse.

Largest-Ever Number of Units Produced Achieved

The first client of our new Czech branch requested us to support them in logistics, help them enhance production efficiency, and secure sales opportunities. Our business relationship in Europe with this manufacturer started when we delivered production facilities to its factory when it was first set up. Since then, we have supplied them with various production materials, including plastics. Our relationship of mutual trust, established through a wide variety of business, led us to fulfill their new request to provide comprehensive services covering logistics for production and related products.

External appearance of the warehouse. Trucks arrive at the docks and the cargo is moved out in a steady stream.

We applied the kanban system (*1) to eliminate all wastefulness in production, synchronizing the information system and all production processes. After renewing the inventory management methods, the delivery of production materials and parts was standardized, while an operational manual was also prepared. As a result of this overhauling of operations, the customer succeeded in establishing a system that achieved the largest-ever number of units produced.
Additionally, in January 2008, we set about the improvement of machinery production for another manufacturer. We gave detailed instructions, including how to supply production lines with parts efficiently, working together in the client's factory. As a result, we were able to improve the inventory accuracy and reduce distribution costs in the first year of the project.

(*1)Kanban system: a production system to reduce inventory and produce only the necessary amount of required products with the best timing. It is also known as the "Just-In-Time" production system.

Manpower is also important, although advanced systems have been introduced. All the inspections are carried out by staff.

Expanding Achievements in the Czech Republic into Other Areas

We plan to actively promote logistics business closely related to production by Japanese companies, establishing a new business model based upon our achievements in the Czech Republic. Although we currently offer services mainly to Japanese companies going into Central and Eastern Europe, we are also planning to offer them to major companies in Europe. Further, we will expand our activities into other areas—including China and Southeast Asia—in the future. Thus, we aim to expand the global logistics business by enhancing customers' trust in our company through achieving excellent results in distribution and production at a number of companies.

Cooperation with other divisions in the group, such as those handling steel materials, chemicals, and nonferrous metals, will also be promoted, with the Logistics Division functioning as the core, so that comprehensive services can be offered and promoted, thereby enhancing the value of the entire group.

Inside the warehouse. We meet customer needs in this extensive space, which has a total floor area of 16,400㎡.